- The U.S. decision to transfer $50 billion of frozen Russian assets to Ukraine marks a significant escalation in economic warfare, aiding Ukraine while provoking global concerns.
- This move raises doubts about the safety of holding reserves in U.S. dollars, pushing nations to explore alternatives and fueling discussions on de-dollarization.
- The use of the dollar as a geopolitical weapon undermines global trust in the currency, challenging its dominance and exposing U.S. hybrid warfare tactics.
Since the onset of Russia’s special operations in Ukraine, the United States of America has adopted a very tough stance against Russia. One such measure has been the freezing of Russian assets worth $50 billion within the United States, along with the imposition of numerous sanctions. Now, after two and a half years of war and continuous pressure from Ukraine on its Western partners to transfer these frozen Russian assets, the U.S. administration has initiated the process of transferring the $50 billion to Ukraine. This marks a drastic shift on the global stage. This decision would help finance the war for Ukraine, and this move may also be reciprocated by Western countries that have already sanctioned Russia and where Russia has stored its assets.
The Russians were aware of this move by the United States, which is why, since the start of the war, they have stopped accepting payments from other countries in U.S. dollars. Instead, they have created a parallel mechanism to convert American dollars into Russian rubles.
This development presents a very different picture to the rest of the world. While Ukraine would be pleased with this decision, President Biden’s move raises concerns globally. Other countries holding their assets in U.S. dollars may now begin to question the safety of their reserves, as the United States could potentially freeze and redirect them at any moment based on its interests.
This move further raises doubts about the reliability of the U.S. dollar and, in turn, challenges the global reliance on it. To some extent, it also highlights that the American currency may not always be a transparent and dependable medium for international transactions and global trade.
This move by the United States of America is a self-damaging one, as it reduces the influence of the American dollar and forces other countries to consider alternative currencies. This aligns with the ongoing global discussions about de-dollarization. While the U.S. warns countries, especially BRICS members, against pursuing de-dollarization by threatening severe repercussions, the first question should be directed at the United States itself: Is it not the one driving de-dollarization through its actions?
The blame for the decline of the U.S. dollar and the increasing willingness of other nations to explore alternatives lies with the United States. Alongside this, the development also highlights a crucial point for the world: the U.S. cannot always be trusted. In times of conflict, America may not attack with missiles or military arsenals, but it employs hybrid warfare. One of the major tools in this hybrid strategy is the use of the American dollar as a weapon.
Aayush Pal is a freelance writer on contemporary geopolitical developments. The views expressed in his work are entirely his own.
Balaji Subramanian 
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Dhruv Ashok